Royal Mail delivered a 61pc surge in pre-tax profits in a set of annual
results that chief executive Moya Greene said “presents a cogent case to
investors” for a stockmarket listing.

The state-owned delivery company said pre-tax profits jumped to £324m from £201m last year and a loss of £165m in 2011. Underlying operating profits soared 165pc to £403m from £152m in 2012.

Ms Greene said Royal Mail, which is being lined up for the biggest privatisation in 20 years, had already spoken to investors about a potential £3bn listing. “We have had soundings with high quality pension fund and mutual fund investors and the response has been positive,” she told The Daily Telegraph.

Royal Mail wants to float as early as the autumn but yesterday Michael Fallon, the Business Minister, said the Government is “committed to a sale but its structure and timing remain open.”

Britain’s online shopping boom was credited for the Royal Mail’s resurgent results. The parcels division recorded a 13pc rise in annual revenues to £4.5bn. Parcels now account for almost half - 48pc - of group revenues which jumped 5pc to £9.3bn. But even letter revenues rose 3pc on a like-for-like basis reflecting the sharp rise in stamp prices as well as the radical turnaround driven by Ms Greene.

Ms Greene said Royal Mail was “crawling out of a deep hole” and returning to strength. “Three years ago this company was bleeding money, was not profitable and any profits came from GLS parcels division in Europe,” she said. “Today a fully three-quarters of our profits are coming from the UK. There’s still a way to go but our UK profit margin has gone from 0.5pc last year to 3.5pc this year.”

She denied that the company was profiteering from the steep rise in the price of stamps. She said the growth was being driven by the parcels business where customers were chosing Royal Mail because of reliability as well as new technology including the website. She added: “Our modernisation programme, one of the largest of its kind in UK industry, is improving our productivity.”

The overhaul continues. Investment costs were £665m, up from £579m the year before which included £75m of redundancy payments, down from £129m the year before. Royal Mail said its delivery and productivity had increased 1.7pc across the core network. The group closed nine mail centres during the year, taking the total reduction to 30pc over the past three years.

The strong performance will boost Royal Mail ahead of stockmarket listing, expected later this year. The business, which seemed in unstoppable decline just a few years ago, is lined up for what would be the biggest privatisation for 20 years. Ms Greene told reporters today that initital talks with investors over an IPO had been encouraging.

Last month Mr Fallon said the Government would decide on a sale strategy for the company “within the year”. He indicated that the listing was the favoured route but that all other options remained open, including a trade sale. The Department for Business is expected to appoint investment bankers to handle the historic privatisation within weeks.

A sell-off will rival the “Tell Sid” privatisations of British Gas and BP in the mid-1980s Thatcher government. In size and money raised, it would eclipse the £1.3bn float of defence firm Qinetiq in 2005 and the £2bn listing of Railtrack in 1995. Margaret Thatcher always opposed the sale of Royal Mail insisting she was “not prepared to have the Queen’s head privatised”.